Tuesday 25/06/19

  1. In MACRO AND BITCOIN NEWS, Trump slaps Iran, German business confidence falls and Bitcoin breaks $11,000
  2. In M&A NEWS, Eldorado buys Caesars and Capgemini merges with Altran
  3. In INDIVIDUAL COMPANY NEWS, Daimler goes into reverse, Monsoon eyes store closures and Monzo doubles its valuation
  4. In OTHER NEWS, I bring you Yorkshire fish & chip exports. For more details, read on…



So Trump puts the squeeze on Iran, Germans lose business confidence and Bitcoin breaks another barrier…

Trump imposes sanctions on Iran’s supreme leader, others (Wall Street Journal, Ian Talley and Rebecca Ballhaus) highlights Trump’s latest actions towards Iran – he’s freezing the assets of Supreme Leader Ali Khamenei’s office and a number of Iranian military commanders as part of his ongoing campaign to put pressure on Iran/force a regime change (depending on what you believe). * SO WHAT? * Given that existing sanctions on Iran are pretty comprehensive, some say that this latest salvo is largely symbolic. However, because the sanctions also ban anyone from doing business with them, this could put a spanner in the works for the business operations of Khamenei’s office which controls a whole load of private companies that are thought to be worth $100-200bn (a pretty wide estimate, to be sure!). This’ll give world leaders even more to talk about at this week’s G20 meeting!

German business confidence sinks to lowest level since 2014 (Daily Telegraph, Alan Tovey) highlights a crisis of confidence among German business leaders, according to the closely-followed Ifo survey. * SO WHAT? * Confidence has been falling for over a year and manufacturing gloom had been particularly dented by weakening order backlogs

as well as the ongoing US-China trade war which has affected exports. I don’t see it getting better any time soon – especially with Trump tariffs being slapped on German car imports.

Bitcoin passes $11,000 on news of Facebook’s cryptocurrency plan (The Guardian, Richard Partington) draws attention to the fact that Bitcoin has broken the $11,000 barrier – its highest level in three months as hype over Facebook’s new Libra cryptocurrency has had a halo effect. Bitcoin has risen by $2,000 in the week since Libra was announced – especially impressive as it had been bumbling along at under $6,000 for most of this year. * SO WHAT? * As usual, no-one really knows why Bitcoin has shot up, but it is most likely that investors are starting to think that Libra will bring cryptocurrencies into the mainstream and that it seems to be increasingly seen as a safe-haven asset like gold against a backdrop of Iran-US-China tensions. I’m more convinced by Libra than I am about Bitcoin given its backers and the fact that it will be anchored to a BASKET of flat currencies, but I can imagine Bitcoin living alongside Libra on a longer term basis. One thing I would say is that most central banks and governments continue to distrust cryptocurrencies, so I think that there is a danger that if Bitcoin really DOES look like going more mainstream, there will be a big movement by governments across the board to regulate this whole area – which could cast a cloud for some time as details are hammered out. Still, until then, let the good times roll!



Eldorado buys Caesars and Capgemini mergers with Altran…

Caesars Palace sale to create biggest casino chain in US (Daily Telegraph, Michael O’Dwyer) heralds a major move by Eldorado Resorts to buy Caesars Entertainment (the company that owns Caesars Palace) in a $17.3bn cash-plus-shares deal. Eldorado has grown quickly over the last few years by making acquisitions and this latest one was at a 28% premium to Caesars’ closing price last week. The new enlarged group will keep the Caesars name (WHERE’S THE APOSTROPHE, EH???), will have 60 US casinos and will continue to trade on the Nasdaq Global Select Market. * SO WHAT? * This is good news for Caesars (which has had debt problems for quite some time) but a bit of a leap of hope for Eldorado, which is probably why the latter’s

shares fell by almost 11% in trading yesterday and Caesars’ rose by 14.5%. Still, I guess scale should help with any cost cutting that’s bound to happen with a deal like this. This may give rival operators a push towards consolidation themselves.

Capgemini in €3.6bn merger with smaller rival Altran Technologies (Financial Times, Harriet Agnew) highlights a merger between French consulting and IT services provider Capgemini and engineering and R&D specialist Altran Technologies with the former buying the latter for €3.6bn in cash. The deal will be subject to regulatory approval but has been recommended and approved by the boards on both sides. Capgemini says that this deal will boost its software engineering capability in India and eastern Europe. * SO WHAT? * I guess that scale is useful in a business like this and continued globalisation means that you have to try as much as you can to be wherever your clients are both in terms of geography and business area.



Daimler has a ‘mare, Monsoon eyes store closures and Monzo doubles its valuation…

In Diesel emissions inquiry sends Daimler into reverse (The Times, Tabby Kinder) we see that Daimler, the company behind Mercedes-Benz, announced its third profit warning in the space of a year and allocated a big chunk of cash to cover an expected crackdown on its diesel vehicles. Its share price fell by 3.75% in trading yesterday which sent other car manufacturers in France and Germany lower.

Monsoon’s restructuring puts 36 stores at risk of closure (Financial Times, Jonathan Eley) highlights the fact that 36 Monsoon and Accessorize stores could close under its

current restructuring proposals with rent cuts of up to 65% at 135 of its 258 stores. Monsoon is seeking a Company Voluntary Arrangement (CVA) as part of its bid for survival and needs to cover a £20m cash shortfall. * SO WHAT? * As we have already seen in the past, even if Monsoon gets this CVA past the creditors, it is no guarantee that it won’t go under anyway at some point down the line. The tough times continue.

Monzo value doubles in fundraising (The Times, Katherine Griffiths) highlights a significant milestone for challenger bank Monzo as its valuation hit £2bn after attracting £113m in investment in the latest fundraising round. * SO WHAT? * This reinforces its position as one of the most highly rated British fintech companies along with Oaknorth, Revolut and Transferwise. It will use the money to help its rollout in the US and develop its “marketplace” idea which will offer a number of different services to its customers.



And finally, in other news…

There’s lots of news out there these days about exports to China being affected by the fallout of the US-China trade war, but here’s one UK export that might just cut the mustard: North Yorkshire chippy to open restaurant in China (BBC, https://tinyurl.com/yxwnr57r). Eeebahhgoom!

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Some of today’s market, commodity & currency moves (as at 0831hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq *DAX *CAC-40 *Nikkei **Shanghai **
7,417 (+0.12%)26,728 (+0.03%)2,945 (-0.17%)8,00612,275 (-0.53%)5,522 (-0.12%)21,157 (-0.57)2,983 (-0.83%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)